If Not Capitalism, What?

When I think about alternatives to capitalism, I go back to basics, to the question of what any economic system actually is and what it does. In every kind of society, whether it’s communal hunting-and-gathering or global industrial capitalism, the answer has two parts.

The first has to do with how a society goes about producing goods and services. In one sense this refers to the method of producing something and what’s used to produce it. Hunter-gatherers don’t plant crops, for example, while agrarian societies cultivate fields with plows, and industrial societies use heavy machinery and other technology to plant, harvest, and process food and even make some of it up in the lab.

In another sense, the act of production is also social—people are organized in relationships through which goods and services are produced. It’s the difference, for example, between shoes being made by independent shoemakers working on their own in small shops and shoes being mass produced by worker-employees in factories owned by someone else.

The second thing to know about an economic system is what happens to what is produced—how it’s distributed among people in the society and who benefits. In other words, what’s the point of economic activity?

If you look at most human societies over the last several hundred thousand years, the point of economic systems has been quite simple and unsurprising—to provide for the needs of the people who participate in them. The tribe needs a way to come up with food and shelter because the people of the tribe have to eat and get out of the rain. Cooperation and sharing have been important values because they make for efficient production and it’s how you make sure everyone gets what they need. Which has been the point in most places for most of history.

The most important thing to realize about industrial capitalism is that it is not organized to meet the needs of the people who participate in it. It is not the first system for which this has been true, but it is the latest version and it dominates the world. It’s true that capitalists have to produce things that people need (or, if not, to persuade them that they do) in order to sell goods and make a profit. If, as a result, capitalism does happen to meet the needs of people, that’s fine, but that is not the point of the system. The point is to allow individuals to compete with one another in order to maximize personal wealth. How this affects everyone else is, within fairly broad limits, largely beside the point.

This means that when a small portion of the population manages to take most of the wealth for themselves, the system is simply operating as it is designed to do. If millions of people don’t have enough food or shelter or decent healthcare, or if roads and bridges and schools are falling apart, or if the planet and other species are being degraded or destroyed, none of this is taken as a sign that the economic system itself is failing. To see how this shows up, all you have to do is look at the list of ‘economic indicators’ used to show how well the economy is doing. There you will find hardly anything designed to measure the quality of people’s everyday lives, the degree to which their needs as human beings are being met. Not to mention the well-being of the planet and non-human species whose fate is inseparable from our own. Such things are not represented because they are not the point of the capitalist economic system.

Over the vast majority of human experience, organizing the world in such a way would have made no sense at all. It would have seemed bizarre and profoundly unwise, even murderous and suicidal, and a repudiation of what it means to live as a full human being. That an economic system would not only allow but encourage a small minority to take almost everything for themselves, that it would support the belief that there is no such thing as too much, that human beings can do whatever they want and imagine a future in which they thrive while the rest of the planet goes under, is so far beyond the boundaries of reality as to be, well, a little crazy. And yet that is precisely where we are, living a kind of systemic insanity based on fantastically insupportable assumptions.

So, if not capitalism, what?

It’s really very simple: An economic system designed first and foremost to meet the needs of human beings and the Earth and the non-human species who call it home, that honors the biological and moral fact of life that we are indeed all in this together.

And how to we get there?

We can only begin where we are, facing the first obstacle in our path, which is the sacred assumption of capitalism that the pursuit of individual greed can be the basis for a moral society and a sustainable planet. Challenging this assumption will mean, among other things, changing the rules that both allow and encourage the unlimited and unaccountable private accumulation of wealth; the massive and reckless gambling and speculation in the financial industry that enriches the few while producing catastrophe for everyone else; and the power of wealth to control major institutions, including the political system.

There are societies that provide an example of what an alternative might look like. Norway is one. It was relatively untouched by the 2008 financial meltdown that rocked the world, because Norway doesn’t allow individual and corporate greed to be the dominating force in their economy. Banks and other financial institutions, for example, are highly regulated and income taxes are high enough to generate the revenue that provides for the basic needs of everyone, such as health care and education.

It’s important to be aware that many of the defining characteristics of capitalism are retained. Businesses are privately owned, for example, by individuals and corporations. One exception to this are resources that are vital to everyone’s wellbeing, such as energy, which are either owned or tightly regulated by the government on behalf of the entire country. Norway’s abundant North Sea oil reserves, for example, are owned by the country as a whole and not private corporations, and the income generated is distributed across the entire population.

There is a name for this kind of economic system. It’s called ‘democratic socialism’. We hear all the time in the U.S. that we’re supposed to be afraid of the ‘socialism’ part because it supposedly means a loss of freedom and the value of the individual. That certainly happened in the first large-scale attempts at socialism—the Soviet Union and China—but there are numerous current examples such as Norway, Sweden, Finland, Denmark, Switzerland, and the Netherlands where socialist principles have worked out much differently (the ‘democratic’ part). If by ‘freedom’ we mean being able to do whatever we want regardless of the consequences, then socialism does mean less freedom than we have in the U.S. But such limits affect primarily the wealthy and corporations, not the great majority of ordinary people. Which is why it is the wealthy and powerful, especially through their control of the mass media, who are continually warning us about the ‘dangers’ of socialism.

Americans are routinely told that we are the most free people on the planet, that everyone wishes they were American, that our standard of living and health care system are the best in the world. But any serious look at the evidence quickly shows this isn’t true. Just ask Norwegians (or Swedes or Danes or . . . ) who routinely come out far ahead of the United States on measures of personal happiness and quality of life, including crime, health care, social mobility, income, wealth, and democracy.

Finding an alternative to capitalism begins with confronting the reality of the economic system we all participate in and how it shapes our lives and the planet we live on.

31 Responses to "If Not Capitalism, What?"

“But such limits affect primarily the wealthy and corporations, not the great majority of ordinary people.” You speak in other writings about racism and sexism and the majority putting down the minority. The system you propose is the most prejudiced. You wish to put down the smallest minority in the world- the individual. You wish to take from those that innovate and earn their money and give to those that do not contribute. What motivation do people have to create new things or do anything at all if they know that someone will give them enough to live?

This is probably a good place to begin a list of Myths about Democratic Socialism—

Myth #1: The individual is oppressed and has no value in democratic socialist countries. This is a strange charge given the priority placed on individual well-being and the high rank of such countries on measures of individual happiness and quality of life. Which society, for example, values the individual more: one where people are saved from having to choose between feeding their children and getting their teeth fixed or one where everyone is on their own, sink or swim?

Myth #2: Democratic socialism encourages people who are able to contribute to nonetheless just kick back, not work, and have their living provided by the taxes paid by their friends and neighbors. This, of course, would be a really stupid if not impossible way to run a society, which no one in their right mind would support, and which, as far as I know, has never existed either in theory or in practice in any society past or present, democratic socialist or otherwise.

SO if I read this correctly it is the difference between the pursuit of being a trillionaire and putting ideas out for your benefit as well as others. Perhaps the difference between a society that praises the individual, as compared to, a society who praises the group. He brings up an interesting point that I have found very interesting to build a thought process off of, but nevertheless I must admit any talk of Socialism does scare me based upon how I was raised.

I not only agree with this, I would argue that this is the main point of democratic socialism. Balance servers and rewards naturally in the universe, and the idea this is different in a social structure seems counterintuitive.

Value of people over money and the interest of all (not only humans but species we share the Earth with) over the interest of one has to be an obviously better way. So why don’t Americans push for change?

@Dave ‘those that innovate’–This is not always true. The capitalistic system invests heavily in Research. Innovation in most of the cases is done by people working under them. Moreover, no innovation is independent, all are based on knowledge acquired by the society over period of time, for which that particular capitalist has not invested anything.

In an alternate system, innovation can be funded by society and all people get the benefit. For example, all medical research can be funded by an international agency with contribution from member states. The innovation can be made available free to any one wants to produce it without any license payment.

The motivation to do things should not come in the form of greed; rather it should come from the motivation that human beings do things to better our existence as a species! We will never become more if we refuse to be more than we are. We fight over scraps rather than trying to better each others lives. Society needs to find a new way of rewarding one for being creative and inventing new things.

It seems that you avoided countering Dave’s second criticism of your theories . . . Why should I strive to become a lawyer/doctor/innovator if I am provided the same benefits as those that don’t? You can’t assume that all people possess the same drive to learn and advance the human race. Incentive is the most powerful and basic human drive. So when you take away the balance of risk/reward and cost/benefit, you are left with the logical solution in people’s minds that overachieving is simply not worth the effort. Even if socialism were to keep part of the reward system intact, the rate of innovation would be far lower. Without capitalism, who’s to say that we would be where we are now technologically? Intellectually? There is no such thing as a utopian system, Mr. Johnson. Division is in our nature. A system that does not embrace our differences and divisions (good AND bad) as human beings is bound to fail.

Myth #3: Democratic socialism exists only as a utopian theory that is bound to fail in pratice because it ignores human nature. I am not being theoretical in suggesting democratic socialism as an alternative to capitalism. The countries mentioned above have organized themselves around democratic socialist ideas and, as a pratical matter, are doing very well compared with the United States. They have, for example, high levels of material prosperity, better health care outcomes and longevity, little if any poverty, far lower rates of violent crime, much higher voter participation in elections, better educated populations who are more knowledgable about the world and science, higher self-reported levels of well-being and happiness, governments that avoid the kind of angry gridlock current in the U.S., and a more sustainable relation to the Earth. They are, of course, not utopias, but actual societies in which people struggle with all the problems that come with the human condition. But from the evidence, it is hard to fault their grasp of human nature or their ability to innovate in comparison with the United States.

Myth #4: In democratic socialist societies, there are no incentives to strive because benefits are the same regardless. This is both true and not true. It’s true in the sense that a benefit like universal health care means everyone has access to health care regardless of what they accomplish in life. It is not true in the sense that everyone’s standard of living is the same. Physicians and department store clerks, for example, do not have the same incomes. Socialism is not about making everyone the same. It is about trying to ensure the basic well-being and dignity of everyone, which is quite different.

You are ensorcelled by the idea of capitalism without realising that you are its slave. The harder you work the more you become enslaved. You get a more expensive car, a bigger house and run up so much household debt, because you can afford the payments, until one day the fear takes you and you stop challenging your bosses who also fear you taking over from them at which point you shut up and suck up just to protect you lifestyle. This is exactly where the 1% want you. You think they work hard? No it’s mostly inherited, this so called capitalist system is really a hidden monarchy we can’t even revolt against because we don’t even know who they are. The end result is that we will never challenge the system and continue to rape the resources of the planet until 50 years from now our children face I hate to think what. Wake up and start believing that there is an alternative and the author of this article is right, this begins with mutual ownership of energy.

Then don’t become a doctor/lawyer/engineer! But stop pushing your agenda to live like royalty simply because you think you are smarter or more talented in some way. Division is not in our nature. It is in our culture. This is proven by the many different ways that societies live. The breakdown of wealth in this country is horrendous. At what point do you think society will break? Because currently more than 2/3 of the country is living in poverty. This is way too high and at some point you need to be able to look at the bigger picture and know that the current society does not work!

Who becomes a doctor/lawyer because of the money?? Usually the first motivating instinct is a passion to help people, the money comes later. The money that does come later often corrupts the initial passion!

So, Allan. Is there a path for the U.S. between where we are to where we could be? Or, do you think the values in the American voting public and the political will are too far entrenched in the sacred freedoms of capitalism to allow enough change to save the poor, protect the planet, and redistribute wealth and power? And will we be able to harness the human capital we have as a nation in ways that provide and distribute enough for us all and advance us forward together?

I am a financially comfortable healthcare professional who treats far too many underserved low income patients. And, I agree that this system is not working. But, as the most powerful nation in the world in this century, I’m not sure we will be able to get past our hubris and change before another nation comes up with a better, stable system of economics and government.

I don’t see evidence that would justify an optimistic response to the questions you pose. At the same time, I have seen enough things happen in the world that I would have said were impossible, that I am also not pessimistic. The alternative to both is to continue the struggle for something better because that is what I believe we are called as human beings to do.

In my opinion our current capitalism gets in the way of any real progress. So much that is invented or created gets thrown out not because its not a better solution but because no one can figure out how to make a profit off of it. A great part of building a better future is staging a transition. There is no glory in this. We imagine the world of colonists and explorers as being all about rugged individualists, but they rode entirely on the efforts of a network of people who shared and cooperated. We are at that stage again but the extended hand is not being met. It is the lack of experience of competitive people that restricts their imaginations. The fact that a person can say that they don’t know how a person could be motivated to work if there were not capitalist incentives to do that work is like hearing a person declare that they are addicted to gambling and saying how great that is for everyone. There are so many who are lost in the illusion that they have missed, that the ship is turning, and that what is an appropriate response has changed.

Many of the arguments we hear when someone proposes a system other than capitalism stems from the fact that our society has been brainwashed to think we all are or can be capitalists. The first step is to educate people that we are a partially capitalist but a mostly consumer society and to further narrow the definition of capitalist I would like to call it vulture capitalism. Vulture capitalism is mainly a phenomenon that takes place within the larger corporations. An example would the company my wife worked for in the 1990’s. It was a large clothing retailer. The owner died and the board of directors took over. They used the company as their personal ATM and within a year the company was out of business. It’s a safe bet that these individuals moved on to other companies and carried out similar actions. The problem with trying to correct this type of behavior is that individuals who act in this manner are able to accumulate so much political influence. They are able to write legislation that allows them to raid companies plus they own the politicians that vote on said legislation. The first practical step to eradicating these practices is to for individuals to do all they can to get Citizens United overturned. The next step is to push for lobbying reform. Thirdly, pressure your politicians to reform and enforce the estate tax. Many cry out about this but the reason this tax was put into place was to prevent families from becoming dynasties. If this tax had done what it was intended to do we never would have felt the will of the monied families of old or more recently the Waltons of Wal Mart fame.

On this planet it is might that makes right. The vast concentrations of wealth in the hands of the few are only possible with military backing, hence ‘state backed capitalism,’read: vastly unequal distribution of wealth backed by the state’s monopoly on the use of force. If there was really such a thing as opportunity we would see wealth distributed equally over society because there would be genuine competition for it. The fact that it is concentrated at the top provides proof there is no competition. This is not rocket science. This is a human system and therefore it was rigged from day 1.

We were brainwashed, taught to think that socialism is bad for the world, that communists “eat” little kids and the only good thing is capitalism. Today we finally realized that the ones that instilled into our minds this idea are the 1% who actually profit from capitalism. The rest of us only work to keep the wheel spinning while misery and hunger increase around the world. Education, heath and security, it can’t stay in the hands of private enterprise.

In order for the United States to achieve the type of Socialist Democracy you mention, there are at least two major obstacles. First, contrary to what some may believe the US constitution and the Bill of Rights were drafted and adopted to enshrine the rights of the individual, not society or the government. Government derives its authority from the governed. There are mechanisms within the constitution to alter or change that which “the people” feel is unjust or outdated. This has been done numerous times since the founding of the nation.

Second, in order to institute a socialist agenda, a centralized government must dictate virtually all aspects of how people live their lives; wages, prices, how much health care you get and so on. I would argue any socialist system would run afoul of the tenth amendment since states would lose autonomy and become irrelevant. I believe what you propose is to scrap the constitution and institute centralized planning based on federal government mandate and control. I can’t think of anything further from the foundation of our country than that. If I wanted European style Socialism, I would happily move to Oslo.

I cannot disagree that unbridled individualism is the biggest obstacle to achieving some version of democratic socialism in the United States. We did manage, however, to create Social Security and Medicare without gutting the Constitution or the Bill of Rights.

The perception that democratic socialism requires that “a centralized government must dictate virtually all aspects of how people live their lives” is simply incorrect. The ‘democratic’ in ‘democratic socialism’ is taken quite seriously in those countries, whose citizens participate in elections far more than we do and enjoy all of the civil liberties found in the U.S. In fact, when you consider how our government routinely invades the privacy of its citizens in the name of national security, if anything, the rights of the individual are better observed under democratic socialism.

First off, I would like to give you a great big THANK YOU. I am a seventeen year old high-school student, and everything I have found in your readings have made all of the sense I’ve been trying to come to myself for a long time. I’ve always thought about what the “Ideal system” would look like, and always come up completely short between socialism and capitalism. Basically, you put all the points in my head down in writing and made them all make sense to me (while, of course, adding others I hadn’t thought of . . . I’m no genius) and it really hit home. There is no ideal system, at least not in practice, right? You could say some way of doing things should be perfect, but unless the human race suddenly turned into clones of the ideal human, nothing will work perfectly. So all you can do is find the best possible way to be a society of imperfect, imprecise humans . . . I think I get it now. Capitalism, as we know it, is so popular because it’s so much easier for people to look for the ideal individual life, rather than struggle to find the impossible ideal society?

The points mentioned above are quite precise and true, but for me you’ve certainly missed the facts, what collective consciousness can do. We have to come in a conflict while fighting the present order. In any society whatsoever the struggle is from within and not pre-planned. So when you suggest a ‘model’ to the current alternative it should be in accordance with the struggle against capitalism and not something utopian. A part in which both the negative impacts of capitalism and socialism should be eradicated or dissolved and to find the common grounds for all. We can’t fight having to put on a model, feeling alienated to the current system, but we should be a part of it and growth should then follow within the system. There is always annihilation of the annihilation and the negation of the negations which makes the dialectics algebra of revolution.

To me the key is incentive. Some people become doctors because they have a vocation, or they have the ability . . . and some because of the money. In Finland, some believe in a better society and work towards it, some work hard because that is how they built, some build businesses because they like the game . . . and a lot just milk the system because it is so easy to do so. The last group can and perhaps will bring the system down.

All “systems” seem to have the same issues—people and their motivations. Capitalism in its purest sense worked best for its population when tempered with humanity, which actually seemed contrary to the objectives of Capitalism. In matter of fact, I have always believed moral business is often in the longer term better business. Being kind to your neighbor is not charity when in the next week he/she can afford to buy your product/services. It may seem socialist, Christian, whatever . . . but it can be good Capitalism as well.

Two very dangerous things in my mind are unchecked consumerism (not consumerism but mad greed-driven consumerism) and financial short-termism (if there is such a word). Both are driving an unthinking stampede to decisions and actions which are detrimental to sustainable profits, growth, society (pick a word). This naturally leads to highs/lows in finance and society.

I find it interesting how we always seem to play this argument out against the two extremes. We also often frame the discussion around the idea that humans only care about one another when there is money involved. These are ideological constructs of the elitist capitalist structure and wealthy U.S. individuals. Why do they get to tell us how we operate . . . especially after so many decades now of proving pretty well that their system doesn’t work.

I agree with the author here in that we need to move on as a species to design a system that provides opportunities for everyone—yes even the losers—and not get hung up on whether everyone is pulling the same weight. We need a system that has a better imagination than seeing money as the only incentive, and there is plenty of evidence that money is now the only incentive because we have been taught that it is the only thing of real value in society.

None of this is rocket science or new. I am over 60 and have been hearing these ideas for my entire life.

Most of the so called ‘innovations’ are not necessarily needed. Sure, we all want things but do we need remotely controlled central heating or nanosprayed waterproof jackets? Many innovations were made by state employees and communists, the resource allocation of human capital was far more efficient. So, rather than a Maths genius working now in the financial sector, the Maths genius would work in science, techn, R&D or codebreaking. Do you really think that the internet or touch screen tech would not have been innovated by non-capitalists? I have noted that the myths about inefficiency are only related to private business arguments such as people paying and receiving purchased products faster. The real necessary services such as health will always be run slightly inefficiently due to the nature of the job. Capitalist consultants and middle managers have only made the health service worse by cutting essential staff, hence more inefficient now than ever (£30bn deficit). I also notice that the most financially savvy people in the world work for banks, most of which have been bailed out by the taxpayers. In a socialist system, these talented bankers would have their skills nurtured and trained in a more appropriate manner which benefits the state rather than bankrupts the economy.

In the context of improving the quality-of-life performance of a country or economy, terms like capitalism, socialism, and variations thereon seem meaningless and pointless. Each person hearing or reading those terms has a different idea of what they mean and these words often trigger responses that are mostly defensive rhetorical statements based largely on ideological rigidity. Instead it seems we need to clarify our goals and discuss specific changes we could make to our system (whatever you want to call the system before and after the changes) to achieve those goals. The northern European countries are outperforming the U.S. and most other countries not because they adopted “socialism”, “democratic socialism”, “state capitalism”, or any other “ism”, but because they have been constantly looking at what is working and not working, at home and in other countries, and tweaking their laws and regulations accordingly.

The differences between those countries and others are subtle. Like all developed countries, the northern European countries have lots of millionaires, some billionaires, lots of big corporations and lots of small businesses, some poor people (but a smaller portion than most countries), some wealthy people cheating on their taxes or corporate welfare, some lower income people doing similar bad things, etc. They all are democratic and have market-based economies. Most of the means of production are privately owned. Who makes or provides what and who gets what, at what wage or price, are determined predominately by the market, not by the government.

And those high-performing northern European countries have not all adopted the same solutions, which shows that there is more than one road to success. For example, to avoid the phenomenon of “working poor” some of those countries have promoted and protected labor unions while others have adopted a high national minimum wage. Some have implemented universal healthcare access via a government run single payer scheme, while others have achieved the same goal via universal private health insurance. Any country wishing to improve the quality of life for all of its citizens has plenty of implemented-elsewhere options to investigate and choose from. Or they can try novel techniques. At least in some countries, it seems the only thing preventing them from performing as well as the world’s best, is ideology. And nothing promotes irrational ideology more than talking about things like “capitalism” and “socialism” regardless of what qualifiers come before or after those terms.

While I agree that ‘socialist’ and ‘capitalist’ are buzz words for many, the solution is not to discard them, but to reclaim them as accurate labels for, among other things, profoundly different worldviews. Socialism is informed by a fundamental concern with serving the needs of both society as a whole and all the people who live their lives as participants in it. Capitalism, however, is based on a competitive model that primarily serves the interests of those individuals who ‘win’ at the expense of everyone else. However imperfect particular versions of socialism may be, they have a great deal to teach us if we can get over the kneejerk reaction that portrays capitalism as something holy and beyond seriuos criticsm and socialism as an enemy of democracy. The capitalism in the U.S. has already gone a long way toward destroying democracy through the dominance of wealthy elites.